As used in this code the word "shall" is
Mandatory (unless otherwise apparent)
As used in this code the word "may" is
permissive (unless otherwise apparent)
Oath" includes
affirmation
Person" means
person, association, organization, partnership, business trust, limited liability company, or corporation
Definition of Insurance
Insurance is a contract whereby one undertakes to indemnify another against loss, damage, or liability arising from a contingent or unknown event
Contingent
Subject to chance
Indemnify
Compensate someone for harm or loss
Nonadmitted," in relation to a person
not entitled to transact insurance business in this State, whether by reason of failure to comply with conditions precedent thereto, or by reason of inability so to comply.
Admitted," in relation to a person
entitled to transact insurance business in this state, having complied with the laws imposing conditions precedent to transaction of such business. The State Compensation Insurance Fund shall be deemed to be admitted pursuant to authority to transact work
Domestic
organized under the laws of this State, whether or not admitted
Foreign
not organized under the laws of this State, whether or not admitted
Mortgage
Trust deed
mortgagor
trustor under such trust deed
mortgagee
beneficiary under such trust deed, or a trustee exercising powers or performing duties granted to or imposed upon him thereunder
lien in respect to real or personal property
charge or incumbrance arising out of a trust deed
Insurance agent
a person authorized, by and on behalf of an insurer, to transact all classes of insurance other than life, disability, or health insurance, on behalf of an admitted insurance company
life licensee
person authorized to act as a life agent on behalf of a life insurer or a disability insurer to transact any of the following:
(1) Life insurance.
(2) Accident and health insurance.
(3) Life and accident and health insurance.
(b) Licenses to act as a life
Life and disability insurance analyst
person who, for a fee or compensation of any kind, paid by or derived from any person or source other than an insurer, advises, purports to advise, or offers to advise any person insured under, named as beneficiary of, or having any interest in, a life or
Insurance broker
a person who, for compensation and on behalf of another person, transacts insurance other than life, disability, or health with, but not on behalf of, an insurer
Casualty broker-agent
person licensed pursuant to Section 1625
Insurance solicitor
natural person employed to aid a property and casualty broker-agent acting as an insurance agent or insurance broker in transacting insurance other than life, disability, or health
Transact as applies to insurance
(a) Solicitation.
(b) Negotiations preliminary to execution.
(c) Execution of a contract of insurance.
(d) Transaction of matters subsequent to execution of the contract and arising out of it.
Paid-in capital
Also called "capital paid-in" means (a) In the case of a foreign mutual insurer not issuing or having outstanding capital stock, the value of its assets in excess of the sum of its liabilities for losses reported, expenses, taxes, and all other indebtedne
Provisions in CIC related to specific class of insurance vs general
code related to a specific class of insurance prevail over code related to general insurance
any notice required to be given to any person by any provision of this code may be given by
mailing notice, postage prepaid, addressed to the person to be notified, at his residence or principal place of business in this State
affidavit
a written statement confirmed by oath or affirmation, for use of evidence in a court
affidavit of the person who mails the notice required by CIC
person who mails the notice, stating the facts of such mailing, is prima facie evidence that the notice was thus mailed
prima facie
assumed evidence until stated otherwise; based on first impression
(a) Any written notice required to be given or mailed to any person by an insurer relating to any insurance on risks or on operations in this state not excepted by subdivision (a), (b), (c), (d), (e), or (g) of Section 1851 from the coverage of Chapter 9
electronic transmission pursuant to Title 2.5 (commencing with Section 1633.1) of Part 2 of Division 3 of the Civil Code, if each party has agreed to conduct the transaction by electronic means pursuant to Section 1633.5 of the Civil Code.
affidavit of the person who initiated the electronic transmission (electronic transmission can ONLY be used if both parties agree...)
person who initiated the electronic transmission, stating the facts of that transmission into an information processing system outside of the control of the sender or of any person that sent the electronic record on behalf of the sender, is prima facie ev
What shall an insurance company do in regards to electronic transmission of required materials?
maintain a system for confirming that any notice or document that is to be provided by electronic means has been sent in a manner consistent with Section 1633.15 of the Civil Code.
(For electronic mailings sent out) what is ok for signature?
electronic signature shall be sufficient for any provision of law requiring a written signature.
How long must an insurer retain a copy of the confirmation and electronic signature when either is required (and with policy confirmation... all should be retrievable upon request by the department of insurance...
at all times while the policy is in force AND 5 years thereafter
The offer of renewal required by Sections 663 and 678, the notice of conditional renewal required by Section 678.1, and the offer of coverage or renewal or any disclosure required by Section 10086 and the offer of renewal for a workers' compensation polic
(1) An insurer, or insurer's representative, acquires the consent of the insured to opt in to receive the offer, notice, or disclosure by electronic transmission, and the insured has not withdrawn that consent, prior to providing the offer, notice, or dis
Acceptable methods for an insurer to demonstrate that the offer, notice, or disclosure was sent to the insured (electronic)
simple mail transfer protocol server log files indicating transmission, or other methodologies indicating sent transmission consistent with standards set forth in Section 1633.15 of the Civil Code.
Acceptable methods for an insurer to demonstrate that the offer, notice, or disclosure was received by the insured include
server log files indicating that the email or application has been received, or log files showing that the insured logged into his or her secured account with the insurer, or other methodologies indicating received transmission consistent with standards s
If the offer, notice, or disclosure is not delivered directly to the electronic address designated by the insured, but placed at an electronic address accessible to the insured (electronic)
an insurer shall notify the insured in plain, clear, and conspicuous language at the electronic address designated by the insured that describes the offer, notice, or disclosure, informs that insured that it is available at another location, and provides
Upon an insurer receiving information indicating that the offer, notice, or disclosure sent by electronic transmission was not received by the insured, the insurer shall, within two business days
(i) Contact the insured to confirm or update the insured's email address and resend the offer, notice, or disclosure by electronic transmission. If the insurer elects to resend the offer, notice, or disclosure by electronic transmission, the insurer shall
If the insurer sends the first electronic offer, notice, or disclosure within the time period required by law and the insurer complies with both paragraph (5) and subparagraph (A) of this paragraph, the electronic offer, notice, or disclosure sent pursuan
the electronic offer, notice, or disclosure sent pursuant to clause (i) or (ii) of subparagraph (A) shall be treated as if mailed in compliance with the applicable statutory regular mail delivery deadlines.
On or before January 1, 2018, the commissioner shall submit a report to the Governor and to the committees of the Senate and Assembly having jurisdiction over insurance and the judiciary, regarding
the impact and implementation of the authorization of the electronic transmission of certain insurance renewal offers, notices, or disclosures as authorized by this section. The report shall include input from insurers, consumers, and consumer organizatio
The department may suspend an insurer from providing offers, notices, or disclosures by electronic transmission if
there is a pattern or practices that demonstrate the insurer has failed to comply with the requirements of this section. An insurer may appeal the suspension and resume its electronic transmission of offers, notices, or disclosures upon communication from
Electronic signature ruling shall remain till....
January 1, 2019, and as of that date is repealed, unless a later enacted statute, that is enacted before January 1, 2019, deletes or extends that date.
Insurers shall maintain a system for electronically confirming a policyholder's decision to opt in to an agreement to conduct transactions electronically and a system that
will allow the policyholder to electronically opt out of the agreement to conduct business electronically as specified in subdivision (c) of Section 1633.5. The insurer shall maintain the electronic records for the same amount of time the insurer would be
designation of insurance coverage as "group" in any code or law of this State other than this code...
does not authorize its representation as a group coverage or as a group policy, certificate or contract by any person licensed or certificated by the commissioner unless the policy providing the coverage is defined as group insurance by a specific provisi
Any person who willfully and knowingly makes, circulates, or transmits to another any false written or printed statement for the purpose of damaging the financial condition or stability of any insurance company doing business in this state is guilty of
misdemeanor punishable by a fine of not more than one thousand dollars ($1,000).
Electronic funds transfer" means
any transfer of funds, other than a transaction originated by check, draft, or similar paper instrument, that is initiated through an electronic terminal, telephonic instrument, or computer or magnetic tape, so as to order, instruct, or authorize a financ
Electronic funds transfer shall be accomplished by
automated clearinghouse debit, an automated clearinghouse credit, a Federal Reserve Wire Transfer (Fedwire), or an international funds transfer, at the option of the insurer.
Automated clearinghouse" means
any federal reserve bank, or an organization established by agreement with the National Automated Clearing House Association, that operates as a clearinghouse for transmitting or receiving entries between banks or bank accounts and that authorizes an elec
Automated clearinghouse debit" means
transaction in which any department of the state, through its designated depository bank, originates an automated clearinghouse transaction debiting the taxpayer's bank account and crediting the state's bank account for the amount of tax. Banking costs in
Automated clearinghouse" means
any federal reserve bank, or an organization established by agreement with the National Automated Clearing House Association, that operates as a clearinghouse for transmitting or receiving entries between banks or bank accounts and that authorizes an elec
Automated clearinghouse credit" means
an automated clearinghouse transaction in which the taxpayer, through its own bank, originates an entry crediting the state's bank account and debiting its own bank account. Banking costs incurred by the state for the automated clearinghouse credit transa
Fedwire" means
any transaction originated by the taxpayer and utilizing the national electronic payment system to transfer funds through federal reserve banks, pursuant to which the taxpayer debits its own bank account and credits the state's bank account. Electronic fu
International funds transfer" means
any transaction originated by the taxpayer and utilizing "SWIFT," the international electronic payment system to transfer funds in which the taxpayer debits its own bank account, and credits the funds to a United States bank that credits the state's bank
workmen's compensation" shall hereafter also be known as
workers' compensation
Surplus line broker
a person licensed under Section 1765 and authorized to do business under Chapter 6 (commencing with Section 1760) of Part 2 of Division 1.
surplus line broker certificate" means
certificate issued by a surplus line broker to an insurance purchaser as evidence of the placement of insurance with an eligible nonadmitted insurer in accordance with the requirements of Sections 1764, 1764.1, and 1764.2
Insurance in this state is divided into the following classes:
(1) Life.
(2) Fire.
(3) Marine.
(4) Title.
(5) Surety.
(6) Disability.
(7) Plate glass.
(8) Liability.
(9) Workers' compensation.
(10) Common carrier liability.
(11) Boiler and machinery.
(12) Burglary.
(13) Credit.
(14) Sprinkler.
(15) Team and vehicle.
Life insurance includes
insurance upon the lives of persons or appertaining thereto, and the granting, purchasing, or disposing of annuities.
Surety insurance includes
(a) The guaranteeing of behavior of persons and the guaranteeing of performance of contracts (including executing or guaranteeing bonds and undertakings required or permitted in all actions or proceedings or by law allowed), other than insurance policies
Disability insurance includes
injury, disablement or death resulting to the insured from accidents, and appertaining to disablements resulting to the insured from sickness.
In statutes that become effective on or after January 1, 2002, the term "health insurance" for purposes of this code shall mean
individual or group disability insurance policy that provides coverage for hospital, medical, or surgical benefits.
The term "health insurance" shall not include any of the following kinds of insurance:
(1) Accidental death and accidental death and dismemberment.
(2) Disability insurance, including hospital indemnity, accident only, and specified disease insurance that pays benefits on a fixed benefit, cash payment only basis.
(3) Credit disability, as d
In a statute that becomes effective on or after January 1, 2008, the term "specialized health insurance policy" as used in this code shall mean
policy of health insurance for covered benefits in a single specialized area of health care, including dental-only, vision-only, and behavioral health-only policies.
Insurers admitted to transact liability insurance are also deemed to be admitted to transact
workers' compensation insurance for the purpose of covering those persons defined as employees by subdivision (d) of Section 3351 of the Labor Code.
Workmen's compensation insurance
insurance against loss from liability imposed by law upon employers to compensate employees and their dependents for injury sustained by the employees arising out of and in the course of the employment, irrespective of negligence or of the fault of either
Credit insurance
insurance of persons engaged in business against loss by reason of extending credit to those dealing with them, and insurance against loss from the failure of persons to meet existing or contemplated obligations to the insured. However, no insurance may b
Mortgage guaranty insurance
insurance against financial loss by reason of the nonpayment of principal, interest and other sums agreed to be paid under the terms of any note or bond or other evidence of indebtedness secured by a mortgage, deed of trust, or other instrument constituti
Except as otherwise stated, the enumeration in this chapter of the kinds of insurance in a particular class does not
limit any such kind to any one of such particular classes, inasmuch as the classification of similar insurance may vary with the subject matter, risk, and connected insurances; but the fact that similar kinds of insurance occur in different classes does n
risk retention group
an alternative risk transfer entity created by the federal Liability Risk Retention Act (LRRA). RRGs must form as liability insurance companies under the laws of at least one state�its charter state or domicile. The policyholders of the RRG are also its o
In the event of receiving notice of a claim or other claim communication, all of the following timelines are accurate EXCEPT
every licensee or claims agent shall transmit notice of the claim to the insurer in no more than 5 calendar days.
An agent or representative who issues long term care insurance must do all of the following EXCEPT
complete a total of 10 hours of continuing education if licensed before January 1st, 2002.
Which of the following is TRUE regarding the use of fictitious names for business?
The actual and fictitious business names must be registered with the commissioner.
All of the following are a duty of an insurer in regards to claims on file and record documentation EXCEPT
maintaining any sales material, which had a material impact on the claims process.
Which are assets that are in excess of an insurer's liability for reported losses, expenses, taxes, and reinsurance of outstanding risks?
paid-in capital
How does an "admitted" person differ from an "nonadmitted" person, as it pertains to insurance?
An "admitted" person has the right to transact insurance business within the state, while a "nonadmitted" person is not entitled to this action.
When should an agent provide an applicant the effective date of coverage, if known, or the circumstances under which coverage will be effective?
at the time of application or receipt of premium
What is the punishment for a person who refuses to deliver books, records, or assets to the commissioner when subject to a seizure order in an insolvency proceeding?
Not more than $1000 fine and/or 1 year imprisonment
While both work with an insurer, how does an "Insurance broker" differ from an "insurance agent"?
The broker does not transact on behalf of an insurer, while the agent does.
Which form of negotiation is covered under the definition of "transact" as applied to insurance?
Negotiations preliminary to execution.
What is the maximum fine for a person who transacts insurance without a valid license?
$50,000 and/or imprisonment for a period not exceeding one year.
Which is an INACCURATE statement regarding a life settlement contract?
The loan proceeds are used to solely pay premiums for the policy and any expenses incurred.
Concealment, whether intentional or unintentional, entitles the injured party to?
Rescind insurance.
If fiduciary funds are received by any licensee, the funds shall be maintained in any of the following EXCEPT
bonds issued in all 50 states of the United States.
What are the requirements for notices required by any provision of the insurance code to a person unless expressly provided otherwise?
They should be sent to a mailing notice at their residence or place of business.
When working on behalf of an insurer for which they are not specifically appointed, what may a licensed agent do?
present a proposal for insurance and transmit an application to the insurer
A person who does NOT hold a valid license may do which of the following
examine contracts of insurance.
Which group of people is offered additional protection by the Unfair Practices Act that regulates trade practices in the business of insurance?
survivors of the Holocaust
How is an insurance policy defined?
The written instrument, in which a contract of insurance is set forth.
ALL of the following are TRUE regarding the process to change the California Code of Regulations EXCEPT
the Office of Administrative Law (OAL) may substitute its own judgment for that of the rulemaking agency.
Which of the following can the insurer do if the insured intentionally conceals or misrepresents a material fact concerning any coverage part?
Rescind the contract.
Which of the following is a party to a contract of insurance bound to communicate EXCEPT
those which the other would know by retaining a consultant with specialized knowledge in insurance matters.
How can a licensee surrender any license for cancellation?
By submitting written notice or by delivering the license to the commissioner.
Which of the following is TRUE regarding advertisements or printed matter used by an agent or broker?
The printed material must accurately show the relationship between the agent or broker and the agency.
Which of the following may be insured against?
Wagering losses.
When may a surplus line broker solicit and place insurance for a home state insured with a nonadmitted insurer?
If the same insurance coverage cannot be procured from an admitted insurer.
Which circumstances in a pretext interview determine if the questions are permissible?
When an insured is consulted by a person who hides his true identity on purpose when fraud for a claim is suspected.
All of the following are to be specified in an insurance policy EXCEPT
the financial rating of the insured.
Which is an INACCURATE statement on the purpose and intent of the Insurance Information and Privacy Protection Act?
The Act permits disclosure of insurance underwriting information and claim history records.
An "insurance agent" means a person authorized, by and on behalf of an insurer, to transact which of the following class of insurance?
Annuities.
Which of the following actions is considered part of the insurance sales process?
Transaction of matters subsequent to execution of the contract and arising out of it.
According to CIC Section 1711, an organization ceases to exist as an entity eligible to hold a license EXCEPT
upon the termination of all contracts.
Which statement describes the intent of the California Financial Information Privacy Act?
It provides greater privacy protections than those provided in the federal Gramm-Leach-Bliley Act.
Which of the following is an insurer allowed to do in the event of a claim?
request a medical examination for the purpose of determining liability under a policy provision
As used in the insurance code, the word "shall" is mandatory and the word "may" is permissive EXCEPT
unless otherwise apparent from the context.
Whether admitted or nonadmitted, how does a "foreign" insurer differ from an "alien" or "domestic" insurer?
A "foreign" insurer is organized under the laws of another state within the United States.
It is unlawful to do any of the following EXCEPT
make or cause to made a knowingly false or fraudulent or material representation for the purpose of encouraging an injured worker to claim benefits.
Which of the following provisions of free insurance offered as an incentive to purchase or rent property is TRUE?
It requires a separate charge or fee.
Which is an INACCURATE statement regarding standards to avoid unfair underwriting for applicants at risk for auto immune deficiency, human immunodeficiency virus, or AIDS related conditions?
Insurers are permitted to schedule AIDS and HIV testing without the specific consent of the individual applying for insurance.
A policy with a life insurance benefit for a disabled employee includes an extension of benefits upon its discontinuance when all of the following are met EXCEPT
during a 30 day period in which to accept the terms of the new policy.
Who is the California Life and Health & Guarantee Association is regulated by?
The California Insurance Commissioner
A permitted form of group disability insurance that conforms to the CIC meets all of the following conditions EXCEPT
the group numbers not less than 5 new entrants yearly.
All of the following are covered under the Access for Infants and Mothers Program EXCEPT
any mother who resides in the State of California whether or not she has applied.
When does a disability policy become incontestable as to the statements contained in the application?
After this policy been in force for a period of two years during the lifetime of the insured.
Can any life insurer issue group life insurance with premium rates less than the usual rates for such insurance?
Yes, they may do so on any group plan, with or without annuities.
When is the practice of 'post claims' underwriting allowable on disability insurance covering hospital, medical or surgical expenses?
At no time.
Which is NOT a requirement of a Medicare Supplement provider?
Displaying prominently on the first page of the policy the disclosure that the policy "will cover all of the medical expenses.
Which is a requirement of an insurer who offers long-term care policies?
Provide the name, address and phone number for the local Health Insurance Counseling and Advocacy Program.
All of the following are requirements for an applicant to be licensed as a life & disability insurance analyst EXCEPT
having been employed by an insurance company.
When is it allowable for a written application for any disability policy to be altered?
by the insurer, for administrative purposes only, when it is clear that the applicant has not made the insertions
All of the following are TRUE for commissions paid to an agent for the sale of a Medicare supplement policy EXCEPT
gifts, bonuses, prizes, awards or finder's fees given for sales or renewals are not considered compensation.
When does a license become inactive for a broker?
upon the termination of all appointments, or all endorsements
What type of licensee can receive a fee from any person or source other than an insurer?
Life and Disability Insurance Analyst
Which of the following BEST defines the general concept of the 24-hour care plan?
It integrates workers? compensation medical care with the care provided by group health insurance.
Are dependents eligible for any premium refunds or dividends paid under any policy of group disability insurance?
Yes, insured employees are generally eligible as well as their dependents.
What do all long-term care insurers, agents, and brokers owe to the policyholder or prospective policyholder?
a duty of honesty, good faith, and fair dealing
The California Life and Health Insurance Guarantee Act provides coverage for all of the following EXCEPT
a stop-loss insurance plan.
When may a licensee surrender for cancellation any license under which they are permitted to act?
at any time
Which is considered unnecessary replacement for long-term coverage unless as a means to consolidate policies with one insurer?
Issuing 3 or more policies within a 12 month period.
Which is an INACCURATE statement regarding inflation protection for long-term care insurance?
The protection covers a specified percentage of actual or reasonable charges, and includes a maximum specified indemnity amount.
When does the guaranteed issue period for Medicare supplement end?
Sixty three days after the disenrollment of the previous coverage.
When a replacement policy is being considered, what is required from an insurer?
A list of existing policies, replacement notice signed by the applicant and the agent, and a notice sent to any existing insurers that replacement is possible are all requirements.
All of the following are TRUE about the rules regarding the sale of life insurance and annuities to seniors age 65 or older EXCEPT
the agent, broker or insurer is required to show a copy of their insurance license with name, address, and phone number when conducting business in the senior's home.
What happens if an owner requests an immediate investment of monies in a variable annuity policy be returned during the 30 day cancellation period?
The owner shall receive the market value at the time of the cancellation.
Which of the following types of coverage must have a proven insurable interest at the time of the application?
coverage for a minor child under age 18 or a corporate owned policy on an employee
Which is an INACCURATE statement regarding blanket life insurance?
The policy is for the benefit of the policyholder.
How long does an employee in a group insurance policy have to exercise the conversion privilege after employment is terminated?
31 days to use the conversion privilege and begin an individual life insurance policy.
Which is an ACCURATE statement regarding dependent coverage under a group insurance policy?
The coverage must not exceed more than 100 percent of the coverage for the insured employee.
After what time period is the policy considered to have been delivered in an acceptable way if premiums have been paid?
after 6 months if the premiums have been paid
What is the purpose of creating minimum underwriting standards for those testing positive for Acquired Immune Deficiency Syndrome, Human Immunodeficiency Virus or Aids Related Complex?
to avoid discrimination between individuals in the same rating class who have been diagnosed with the condition of AIDS, ARC or HIV
All of the following conditions provide a basis for group life insurance coverage EXCEPT
amounts of insurance may be selected as needed per individuals personal need.
Which of the following is TRUE of the conversion privileges for the insured in group life insurance?
The option to name a new beneficiary can be exercised by the owner.
Which is an INACCURATE statement regarding underwriting based on genetic testing?
The proposed insured must pay for the cost of the testing.
Which is an INACCURATE statement regarding coverage for domestic partnerships?
A policyholder may not require that a domestic partnership be registered to qualify for coverage.
When an insured under age 60 purchases a new policy, how much time do they have to cancel and receive a full refund of premiums?
The insured has a period of not less than 10, and not more than 30 days, during which they may cancel and receive a full refund for the premiums paid.
peril
serious or immediate danger
concealment
Neglect to communicate that which a party knows, and ought to
communicate
Concealment, whether intentional or unintentional, entitles
the injured party to
rescind insurance